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November saw a real diversity in terms of winners and losers amongst closed sales here in the beach cities.
Again, just to repeat what we’ve said in the past, this informal survey focuses on those sales where the sellers made a killing (the “winners”) and those sales where the buyers ended up with a good deal and the sellers got the short end of the stick (the “losers”). However, in the bigger scheme of things, there are no real losers here since each sale involves a willing seller and a willing buyer.
Let’s run through the highlights:
There were a number of seller home runs in last month’s sales but the hands down winner has to be 2666 The Strand, which set a new Strand record for both Manhattan and Hermosa. We wrote about this sale previously (see our post “Record Strand Price (And It’s Not in Manhattan Beach)“).
Here the developer paid $6 million for the old duplex at this address just to get the extra-valuable pie-shaped lot (okay, for you geometry purists, the lot is really a trapezoid) with 70 feet of beach frontage and sold the new 5-bedroom, 7000 sq.ft. home for $14.8 million.
We can speculate on the developer’s cost to build but, keep in mind, the lot was purchased when new Strand homes were going for a lot less than $14.8 million and the developer was certainly expecting to make a profit even back then.
In fact, the home debuted on the MLS in January at $13.9 million and immediately went through several price hikes as the market pushed higher. Eventually, the list price was pegged at $15.9 million. Was this just to give the seller room to negotiate? If so, it worked. We hear the buyer was considering buying the most expensive single family home in Manhattan Beach at 201 18th Street before striking a deal here.
Were it not for 2666 The Strand’s sale last month, this Manhattan Strand sale might have been the clear winner from the seller’s perspective. But what’s interesting is that given its eventual sale price of $8.7 million compared to its starting price of $11 million and almost 5 months on the market, one would have thought the seller struck out here.
Turns out the original list price was a case of over-reaching. In fact, this highly customized 3-bedroom home never had much appeal to Strand buyers looking for a turnkey home, even with a Swiss architect in its pedigree.
However, as a teardown, there was clearly value so long as the buyers could get it at a discount, which they did. We wrote about this in our post entitled “$8.7 Million Teardown?”
The back story is equally interesting. Seems the buyers originally had an interest in 2216 The Strand in Manhattan Beach, a 6-bedroom, 8-bath, 5679 sqft contemporary home built by Sexton Homes in ’07. At the time, this home was listed for $11.5 million and the buyers purportedly offered full price.
However, the seller, seeing what was happening with 2666 The Strand (see how we bring this story full circle?) and its escalating price point, purportedly decided to hold out for more money, which may have been a mistake (as nice a home as 2216 The Strand is, it does have some locational issues, namely, it looks out over the Marine Avenue turnaround and the public john on the beach).
In any case, the buyer bailed on 2216 The Strand, strolled down the block and picked up 2316 The Strand.
So how did the sellers of 2316 The Strand do? Surprisingly well, thank you very much. They originally paid just $2,340,000 for the property back in 2000 before building their custom ‘European architectural masterpiece’ (and future teardown, as it turns out). At the end of the day, they still made out like bandits.
The sellers bought this 5-bedroom, 4-bath Gary Wells-built home in 2005 for $1.7 million (the home was seven years old at that time). They tried to bail a few years later in 2007 just as the market was headed down and the $2,350,000 asking price did not draw a response. In 2008, they went as low as $1,949,000 – still no takers.
Fast forward past a 2011 remodel and this Tree section Mediterranean just closed escrow last month for $2.3 million.
We’ve said before that flipping is back in a big way and here is another example.
This 3000 sq.ft. East Manhattan home on a 7500 sq.ft. corner lot was purchased off-market by the flipper, Braun Corp (in partnership with a well-known local realtor) for $1,250,000 in June. After an extensive rehab, it hit the MLS in October and almost immediately found a buyer at the full asking price of $2,000,000.
The buyer? Jim Cleamons, former Laker star (and assistant coach). He previously sold another East Manhattan home last summer for $2.6 million (off-market) and we thought at the time that he’d be moving to Milwaukee, where he’d accepted an assistant coaching position with the Bucks.
Good thing you stayed put, Jim. That cold weather in Milwaukee lately has been brutal.
Honorable mentions in the Winners category include:
316 23rd Street, Manhattan Beach: A contemporary 3-bedroom ocean-view home on a half lot. Sellers paid $2.4 million in 2006 and, despite spending 376 days on the market (with a starting price in November, 2012, of $2,995,000), finally found a buyer at $2.8 million.
1629 Golden Avenue, Hermosa Beach: One of two brand new contemporary townhomes from Lemieux Development, this 5-bedroom , 3300 sqft ocean-view unit at the top of the hill in East Hermosa (very near Hermosa View elementary) sold for $1,785,000. The sister unit, 1627 Golden Avenue, is still available for $1,799,000. The developer paid just $770,000 for the land.
3108 Walnut Avenue, Manhattan Beach: This 4-bedroom, 3684 sq.ft. Tree section Cape Cod had a long and troubled history. The seller paid $1,005,000 for it in 2002 and then proceeded to pile on roughly $1.5 million in mortgage debt.
When the market tanked, the strapped seller put his rough-around-the-edges home on the market as a short pay with a succession of realtors (at one time, it was listed as low as $1,099,000) before dumping it back on the market this year for $1,795,000. At that price, it was no longer a short sale and, when a buyer appeared at $1,750,000, the seller was effectively bailed out and, thus, qualifies as a winner in our book.
As for the home itself, it is currently being gutted (no surprise there).
This is actually a stunning Dave Odle-built Tuscan-style home with 5 bedrooms, 5½ baths and over 4200 sq.ft. including a magnificent, 16-seat theater room. The owners just sold it for $2.9 million after struggling to sell it, on and off, for two years at lower list prices. In fact, it was last priced at $2,795,000 when a bidding war broke out, pushing the sale price up above all of their previous asking prices.
So why is this sale in our Loser category? Because the owners paid $3,150,000 when it was brand new in 2007.
This 4-bedroom, 3373 sq.ft. Mediterranean overelooks Hermosa Valley. The owner paid $1,995,000 in 2005 and, in 2009, did some major upgrades including a wine cellar and remodeled bathrooms.
Unfortunately, all the improvements added only $55,000 to the value as it just recently resold for $2,050,000. After selling expenses, this one was a money loser for the former owner.
The seller, a former pro hockey goalie, bought this 5-bedroom Tree section Mediterranean in 2006 for $2,650,000. In fact, he stepped in while it was still under construction by JRO and added some customization.
However, with Mediterranean-style homes less popular now (note that the other two homes in this month’s loser penalty box are similar in style), the home was able to command “only” $2,570,000 upon resale last month.
If you’ve got an over-abundance of cha-ching, why not spend it on a beachfront house with 70′ of frontage on The Strand? Such a sale just closed escrow at $14.8 million. In Hermosa Beach! In fact, the top three recorded single family home sales on The Strand have had Hermosa addresses. Read more about these homes here in this article.
Does anyone remember the bursting of the real estate bubble? In real estate terms, it seems like last century. For those in need of reminding, we saw home prices peak in 2007 and then drop 20% over the next two years. So, for example, the median single family home sale price in Manhattan Beach hit […]
Still trying to become the most expensive home ever sold in the Manhattan Beach Hill section that was listed on the MLS (a very important qualifier), 250 South Dianthus Street (a/k/a Summer Hill Estate) is back on the market with a new list price of $9,900,000 and some serious freshening up.
October produced some stunning wins for a number of sellers here in the South Bay. The only sellers who seemed to come up short were a couple of luxury Hermosa Beach homes, one of which was a short sale.
Space is at a premium here in the beach cities. But that doesn’t deter the more well-heeled homeowners when there is an opportunity to expand their property by absorbing a neighbor. Witness these two recent examples, one in the Hill section and one in the Tree section of Manhattan Beach.
Short sales are inherently problematic because they involve the sale of a home for less than what is owed on the mortgage loan(s). But combine a short sale with a bankruptcy and a court confirmation AND a reluctant seller and you’ve got an amazingly difficult home to market, even in this sellers’ market.
We sometimes come across properties that are listed as “probate sale with court confirmation.” These are properties being liquidated as part of the probate process where the court may entertain overbids from other buyers before blessing the sale. In this case, there was a real bidding war at the court confirmation hearing for this rather modest Hill section home.
A recent article in the Wall Street Journal cited a study which showed that, when the residential real estate market is strong, agents tend to incorporate language in their listings that evokes the sun, the views and other aspects that emphasize the lifestyle features of the home. We cite a recent Manhattan Beach Tree section listing as an example that supports this conclusion.
Another in our weekly surveys of the real estate landscape to see who the winners and who the losers were in last week’s residential sales in the South Bay, including a fire-damaged 840 sqft beach bungalow in the Manhattan Beach Sand section that got bid up by 26% when you add back in the commissions (in an unusual twist, all the commissions were paid by the buyer).